Audit Exposes Gaps in Financial Intelligence Authority: UGX 31.2 billion Spent, But Key Mandates Missed

Beneath the spotless surface of a perfectly balanced budget, the Financial Intelligence Authority (FIA) is grappling with deeper issues of missed targets, shifting priorities, and implementation failures, an audit report reveals. 

Despite drawing and spending its full annual allocation of UGX 31.2 billion in the financial year ending June 2024, Uganda’s financial watchdog failed to fully execute some of its vital activities. 

The FIA may have complied with financial reporting regulations, but its operational performance, the report shows, fell significantly short of what its work plan demanded. 

The FIA’s annual budget was divided into three main spending categories.

Just over UGX 13.8 billion, or 44.5%, went to salaries and other wage-related costs, while the bulk of the money – UGX 16.6 billion, making up 53.2% – was used to run the Authority’s day-to-day operations.

Meanwhile, a much smaller share, UGX 729 million or just 2.3%, was set aside for development projects.

Every shilling was spent on salaries, rent, workshops, consultancy services, ICT supplies, and operations. But a forensic look reveals worrying inconsistencies between funding and execution.

Out of the 41 planned activities under eight key output areas, only 17 activities with a budget of UGX 11.32 billion were fully implemented.

Another 19 activities worth UGX 19.27 billion were implemented under partially completed output categories. But notably, five activities, amounting to UGX 597 million, were either partially implemented or not executed at all.

Critical shortfalls 

Among the more concerning lapses are the Financial Intelligence Authority’s failure to produce 40 financial due diligence (FDD) reports to guide government partnerships. However, only 27 were completed. Yet, UGX 303 million earmarked for the output was fully expended.

“The Authority doesn’t control how many financial due diligence requests it receives,” the report quotes FIA management, adding “the activity is demand-driven.”

When it came to monitoring how well institutions were complying with anti-money laundering and counter-terrorism financing rules, the FIA had set ambitious targets – 320 annual compliance reports and 80 audits. But in reality, the agency fell far short. 

Only 20 compliance reports were reviewed, along with 40 risk assessments and 71 audits. 

What is more striking is that these activities were considered “budget-neutral,” meaning they didn’t require any extra money beyond what was already available. 

There was also a plan to carry out two additional joint inspections with other supervisory bodies under the audit and risk management programme. But those never happened. 

Despite this, the full amount allocated for the inspections – about  UGX 18.64 million – was recorded as spent. 

The Authority later explained that the two inspections had been absorbed into another ongoing inspection programme, but this raised concerns about how clearly and consistently FIA tracks and reports its activities.

“These were folded into the 14 inspections under another budget line,” FIA responded. “In total, 28 inspections were carried out.”

One of the more costly unimplemented initiatives was the UGX 195 million budget for an Application Programming Interface (API) meant to enable real-time information sharing with other government agencies.

While a blueprint was finalized, the API’s operationalization was deferred to the 2024/25 budget.

“Operationalization is ongoing,” management said, citing process delays.

The planned Integrated Data Intelligence Platform budgeted for UGX 80 million was never implemented

Reason? The project was abandoned midway after the Finance Ministry designated FIA as the national AML statistics agency, necessitating a shift to a different data framework.

“The resources were reallocated to support the development of the FIA’s Enterprise Risk Management system,” the report notes.

The FIA blamed some of its performance gaps on staffing challenges, shifting priorities, and oversight failures, including the omission of outputs from the Internal Audit Department in its performance reports.

The Auditor General recommended that the Financial Intelligence Authority stick to its approved work plans, avoid shifting priorities without clear justification, ensure that any project delays or reallocations are well-documented, and fully integrate internal audit findings into its overall planning and reporting processes.

As Uganda tightens its financial governance framework under pressure from regional watchdogs like ESAAMLG, FIA’s performance will be under sharper scrutiny, not just for how it spends money, but for how it uses its tools and intelligence to safeguard Uganda’s financial system.